Sensex gains 76 points, broader markets outperform for 5th day

22 May 2014

The market continued its consolidation for the third consecutive session on Thursday after strong run-up but the broader markets outperformed benchmarks for the fifth day in a row.

The Sensex rose 76.38 points to close at 24374.40 after rising as much as 227 points intraday. The Nifty advanced 23.50 points to 7276.40 at end after hitting a day's high of 7319.55. The BSE Midcap and Smallcap indices jumped over 2 percent, in addition to 9-12 percent rally in previous four sessions.

After landslide win of BJP in Lok Sabha election, investors started focusing on upcoming Budget from the new government. Experts feel the market may hit new record high before the Budget announcement.

Arora says the new finance minister will not be someone different from the names already discussed but maybe someone more inclined towards academics as he will have a free hand and could give a Budget equivalent to that of Manmohan Singh's Budget or P Chidambaram's dream Budget.

Positive Asian cues too helped the market gain. Nikkei rose 2 percent on positive reading on China's factory sector and reassurance from Federal Reserve for continuous support to the economy.

Back home, India's largest coal mining company Coal India gained nearly 5 percent on media reports that Narendra Modi is exploring the possibility of converting various units of company into independent companies.

Top car maker Maruti Suzuki was up 4.4 percent after CLSA reiterated the company as its top auto pick with a target price of Rs 2700. Its 3-year bull case value is at Rs 4500 per share as it believes Maruti will be the biggest beneficiary of recovery in demand.

Bajaj Auto rose over a percent after the Egypt government lifted ban on import of two wheelers and three wheelers. Edelweiss revised its FY15e and FY16e earnings per share upwards by 2 percent and 1.5 percent on the stock and maintains a 'buy' with revised target price of Rs 2,266.

NTPC topped the buying list, rising over 5 percent followed by Sesa Sterlite with 4 percent. GAIL and Tata Power rallied 3 percent each. BSE Realty Index was up nearly 6 percent as realty major DLF shot up 9.5 percent.

In March, the foreign investment inflows more than doubled to USD 3.53 billion from USD 1.52 in the same month last year. The highest FDI came in services (USD 2.22 billion), followed by automobiles (USD 1.51 billion), telecommunications (USD 1.3 billion), pharmaceuticals (USD 1.27 billion) and construction development (USD 1.22 billion) in 2013-14.

Singapore led the FDI inflows into India with USD 5.98 billion, followed by Mauritius (USD 4.85 billion), the UK (USD 3.21 billion) and the Netherlands (USD 2.27 billion). The country needs foreign investment to help regain its growth momentum. India's economic growth slowed to a decade's low of 4.5 per cent in 2012-13.

03:45 pm Rupee pollInvestors built up the largest bullish bets on rupee in more than two years in recent weeks, while sentiment on the Thai baht turned the most sour in three months, a Reuters poll showed on Thursday, as the countries' political fortunes turned in markedly different directions.

Long positions in the Philippine peso and the Malaysian ringgit rose to their highest levels in more than one year as their central banks took a hawkish stance and signalled policy rate increases may be on the cards in coming months.

Sentiment on the rupee grew to the most optimistic since February 2012 in the last two weeks, according to a survey of 12 currency analysts.

The Indian currency hit an 11-month high on Monday as strong foreign inflows led local shares to record closing highs.

03:35 pm Market closingThe market ended on a slightly flattish note. The Sensex is up 78.80 points at 24376.82 and the Nifty is up 21.70 points at 7274.60. About 2200 shares have advanced, 715 shares declined, and 97 shares are unchanged.

Both Coal India and Maruti gained 5 percent each while NTPC, Sesa Sterlite and SBI were major gainers in the Sensex.

Among the losers were BHEL, Hindalco, Bharti Airtel, HDFC and M&M.

03:20 pm SlumpShares in Essar Oil and Essar Ports slumped after the companies said they have not received any proposal from promoters for a delisting of domestic shares, according to exchange filings.

There were media reports that the conglomerate was considering delisting all of its publicly listed companies from domestic exchanges, citing unnamed people with knowledge of the matter.

Shares of all three of the listed Essar units gained 14-15 percent each in the previous session.

03:10 pm ResultsMotherson Sumi Systems, the flagship company of the Samvardhana Motherson Group, has reported a 54.5 percent growth in net profit to Rs 302.5 crore in the quarter ended March 2014 on consolidated basis, driven by higher revenue and operational performance. The profit in corresponding quarter of last fiscal was Rs 195.8 crore. Numbers were slightly lower than expectations. Analysts had expected net profit of Rs 332 crore on revenue of Rs 8,550 crore for the quarter.

02:59pm Market UpdateThe 30-share BSE Sensex shed more than 150 points from day's high, up 38.99 points to 24337.01 while the 50-share NSE Nifty rose 9.10 points to 7262. The broader markets are still strong despite some profit-taking.

Topline and bottomline were in-line as analysts had expected the company to report net profit of Rs 109 crore on revenue of Rs 885 crore for the quarter.

Consolidated net sales declined 6.9 percent to Rs 882.9 crore in the quarter ended March 2014 from Rs 948.3 crore in same quarter last year while total expenses dropped 11.77 percent on yearly basis to Rs 560.16 crore.

Operating profit or earnings before interest, tax, depreciation and amortisation grew 4.5 percent to Rs 442 crore and margin expanded 550 basis points to 50.1 percent in the quarter gone by, which were better than analysts' forecast. Both were expected at Rs 418 crore and 47.3 percent, respectively.

02:45pm Ashok Leyland falls 1%Ashok leyland, the second largest commercial vehicle maker in India, will announce its fourth quarter (January-March) earnings today. According to CNBC-TV18 poll estimates, analysts expect the company to report a net loss of Rs 80 crore during the quarter as against profit of Rs 150 crore in same quarter last year. But the loss may moderate compared to Rs 230 crore in third quarter of FY14.

In fact, the company has been making losses at the net level for many quarters. In Q3FY14, the matter got worse when it reported its first ever EBIT loss with margins at negative 5 percent. High discounts, weak product mix (high share of low margin STU-state transport undertaking orders) and operating deleverage impacted profitability.

Revenue is seen falling 18 percent to Rs 3,050 crore in the quarter ended March 2014 from Rs 3,728.4 crore in the year-ago period.

In an interview to CNBC-TV18, Arora says the new finance minister will not be someone different from the names already discussed, but maybe someone more inclined towards academics as he will have a free hand and could give a Budget equivalent to that of Manmohan Singh's Budget or P Chidambaram's dream Budget.

Right now, Arun Jaitely and Arun Shourie are being considered as the top contenders for the post.

02:10pm BSE and USE to mergeRajnikant Patel, former MD & CEO of BSE, said the merger is a positive for both the exchanges as ''they can now look at synergies and a larger pie of business and consolidation, but how positively it effects the BSE volumes that remains to be seen.''

BSE currently holds 14.56 percent stake in USE and had invested Rs 22 crore. The deal values BSE at Rs 3,900 crore and USE at Rs 150 crore.

Alok Churiwala, Vice-chairman of the BSE Brokers' Forum feels it's a great deal for both the exchanges.

From BSE's point of view, they are buying a competitor in a way as USE was on currency segment, whereas BSE has recently launched it, he said.

He thinks that through the deal BSE will be able to leverage the relationships and linkages that USE has with banks.

02:00pm The market maintained strong momentum in afternoon trade while the broader markets continued to outperform benchmarks with the BSE Midcap and Smallcap indices rising over 2 percent.

The Sensex advanced 156.43 points to 24454.45 and the Nifty rose 46.40 points to 7299.30. About 2228 shares have advanced, 639 shares declined, and 98 shares are unchanged.

Coal India rallied over 5 percent after reports indicate Narendra Modi government exploring the possibility of converting various units of Coal India into independent companies and making respective state governments equity holders. It may also open up the sector to foreign investment to boost output, says report.

Top car maker Maruti Suzuki gained nearly 5 percent after CLSA reiterated the company as top auto pick with a target price of Rs 2700. Its 3-year bull case value is at Rs 4500 apiece as it believes Maruti will be the biggest beneficiary of recovery in demand.

Shares of NTPC and Sesa Sterlite jumped 4 percent each followed by Reliance Industries, ICICI Bank, State Bank of India, Tata Steel, GAIL and Tata Power with 2-2.5 percent.

In an interview to CNBC-TV18, Arora says the new finance minister will not be someone different from the names already discussed but maybe someone more inclined towards academics as he will have a free hand and could give a Budget equivalent to that of Manmohan Singh's Budget or P Chidambaram's dream Budget.

Right now, Arun Jaitely and Arun Shourie are being considered as the top contenders for the post. With regards to specific stocks, Arora is bullish on Triveni Turbine from midcap space and has a sell rating on Coal India due to its lower volume guidance.

Under the merger terms, a USE shareholder will get 1 share of BSE for every 385 shares held. The merger will lead to dilution of around 3.2 percent for BSE.

Speaking on the development and what it means, Rajnikant Patel, former MD & CEO of BSE, said the merger is a positive for both the exchanges as ''they can now look at synergies and a larger pie of business and consolidation, but how positively it effects the BSE volumes that remains to be seen.''

BSE currently holds 14.56 percent in USE and had invested Rs 22 crore. The deal values BSE at Rs 3900 crore and USE at Rs 150 crore.

1:40 pm Results: Ashok leyland, the second largest commercial vehicle maker in India, will announce its fourth quarter (January-March) earnings today. According to CNBC-TV18 poll estimates, analysts expect the company to report a net loss of Rs 80 crore during the quarter as against profit of Rs 150 crore in same quarter last year. But the loss may moderate compared to Rs 230 crore in third quarter of FY14.

In fact, the company has been making losses at the net level for many quarters. In Q3FY14, the matter got worse when it reported its first ever EBIT loss with margins at negative 5 percent. High discounts, weak product mix (high share of low margin STU-state transport undertaking orders) and operating deleverage impacted profitability.

Revenue is seen falling 18 percent to Rs 3,050 crore in the quarter ended March 2014 from Rs 3,728.4 crore in the year-ago period.

''With a strong product cycle kick-starting and competition in disarray, Maruti will be the biggest beneficiary of this surge. In a bull case, private vehicle (PV) industry volumes could grow at 20 percent CAGR over FY15-18, which could double Maruti's stock in 3 years,'' it says in a report.

The firm is betting on Maruti's five new products lined up in FY15-FY16, which is likely to accelerate its market share. Its volume growth, margins and pricing power is also seen to be growing phenomenally over the years.

The Nifty holds marginally above 7300. The Nifty up 52.80 points or 0.73 percent at 7305.70 and the Sensex is up 178.91 points or 0.74 percent at 24476.93. About 2186 shares have advanced, 611 shares declined, and 90 shares are unchanged.

Sectorally, all the indices are in the green except IT index. Midcaps continue their outperformance, while metals, banks, realty and consumer durables make a stellar rally.

Coal India, Maruti Suzuki, NTPC, Sesa Sterlite and Reliance are top gainers in the Sensex. Among the losers are BHEL, Bharti, Hindalco, HDFC and Wipro.

Japan's Nikkei share average boasted its biggest rise in a month on Thursday as a survey showing an improvement in Chinese manufacturing added to an already upbeat mood after the US Federal Reserve reaffirmed its commitment to support the economy.

The Nikkei rose 2.1 percent to 14,337.79, with news government-controlled Japan Post Insurance Life is ramping up its investment in Japanese stocks providing the icing on the cake.The broader Topix gained 1.7 percent to 1,169.34 in highest trading volume in seven weeks while the new JPX-Nikkei Index 400 added 1.7 percent to 10,666.60.

The government is the largest spender and due to the elections and the code of conduct that was put in place, the media company didn't see too much surge in ad volumes, he explains.

12:40pm Motherson Sumi gains 4%Motherson Sumi Systems, the flagship company of the Samvardhana Motherson Group, has reported a 54.5 percent growth in net profit to Rs 302.5 crore in the quarter ended March 2014 on consolidated basis, driven by higher revenue and operational performance. The profit in corresponding quarter of last fiscal was Rs 195.8 crore.

Numbers were slightly lower than expectations. Analysts had expected net profit of Rs 332 crore on revenue of Rs 8,550 crore for the quarter.

12:30pm Nikkei gains 2%Japan's Nikkei share average boasted its biggest rise in a month on Thursday as a survey showing an improvement in Chinese manufacturing added to an already upbeat mood after the US Federal Reserve reaffirmed its commitment to support the economy.

The Nikkei rose 2.1 percent to 14,337.79, with news government-controlled Japan Post Insurance Life is ramping up its investment in Japanese stocks providing the icing on the cake, reports Reuters.

12:20pm Titan Company at record high, up 8%Shares of Titan Company are flying off the shelves as investors' appetite for gold never seems to be satiated. The stock hit record high at Rs 347.65 per share, up 12 percent intraday on Thursday as RBI relaxed gold import norms.

The central bank has marginally eased the import squeeze on gold. Rules have been eased for trading houses to import gold under the 20:80 scheme. Under the much criticised 20:80 scheme, an importer had to ensure that at least one-fifth, or 20 percent, of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use.

Brokerages are betting big on the stock with revised target. Titan is Deutsche Bank's top pick with a target price of Rs 370. It has a positive view on the stock based on demand recovery and strong expansion plans.

12:10pm Market ExpertDhiraj Agarwal, Director- Institutional Equities at Standard Chartered is optimistic on the Indian equity market going forward. In an interview to CNBC-TV18, he said that the floor for the market has moved higher to 6,800-7,000.

Despite the recent run-up seen in equities, the market is trading at 14.5-15 times FY16 earnings and he sees the valuations scaling up to 18-19 times in the future.

Continuing his bullish tone, he added that corporate earnings will see an improvement from H216 and FY17 onwards.

Most market experts have turned positive on beaten-down cyclicals and economy-sensitive stocks on hopes that the new government will announce big bang reforms for these sectors.

Agarwal said that even after the recent rally seen in banks, the valuations of private sector lenders is still lower than that of 2009 level. Also, despite doubling, many infra stocks are still below 2009 peaks, he added.

12:00pm Equity benchmarks extended rally in noon trade and the rupee appreciated further, up 27 paise to 58.50 a dollar. The Sensex advanced 202.41 points to 24500.43 and the Nifty climbed 58.70 points to 7311.60.

The broader markets extended gains too; the BSE Midcap and Smallcap indices jumped over 2.4 percent. Advancing shares outnumbered declining ones by a ratio of 2150 to 577 on the BSE.

11:50 am Poll: Gujarat State Petronet, a natural gas transmission company, will announce its fourth quarter (January-March) earnings today. According to CNBC-TV18 poll estimates, analysts expect profit after tax of the company to fall 38 percent year-on-year to Rs 100 crore during the quarter, driven by lower volumes and high tariff base.

Total income is seen falling 31 percent to Rs 250 crore in the quarter ended March 2014 from Rs 360 crore in same quarter last year.

Operating profit or earnings before interest, tax, depreciation and amortisation may drop 33 percent year-on-year to Rs 220 crore and margin may decline 300 basis points to 88 percent compared to corresponding quarter of last year.

He believes the next big push for the market will probably be after the first set of announcements come in from the new government. That is when the index will move to higher levels to perhaps 7600 odd or so, he adds.

"We would assume that maybe sometime in June or early July where you have got the budget, I don't know what platform they will use to start making those announcements but that is when you will see the index moving to higher levels and maybe we could see that move up to 7600 odd or so. But, for now we continue to see the Nifty consolidate in the 7200-7300 band with of course lot of sectoral positioning changing within portfolios with what we have been seeing like IT, pharma etc being sold out to buy into cyclicals, buy into banks and those kind of trades," he said.

11:30 am Poll: South-based real estate company Sobha Developers will announce its fourth quarter (January-March) earnings today. According to CNBC-TV18 poll estimates, analysts expect profit after tax of the company to rise 4.5 percent year-on-year to Rs 60.6 crore for the quarter.

Revenue is seen falling 7 percent to Rs 508 crore in the quarter ended March 2014 from Rs 544.3 crore in same quarter last fiscal. Operating profit may increase 1.6 percent to Rs 151.5 crore and operating profit margin may expand 580 basis points to 29.8 percent compared to corresponding quarter of last fiscal.

11:20 am Buzzing: Shares of Bajaj Auto jumped over 3 percent as Egypt government has lifted its import ban on two and three-wheeler. As the ban is lifted, Bajaj Auto is likely to get fresh orders for its products from Egypt. The auto major is likely to export around 5,500 three-wheelers and around 3,500 motorcycles next month.

Earlier on February 12, the Egypt Cabinet had authorised its ministry of finance to go-ahead with the ban, a move primarily designed to give a leg-up to its fledgling automobile industry. Egypt constitutes a vital export market for Bajaj Auto, since it contributed 31 percent of the total three-wheeler exports and around 5 percent of the two-wheeler exports in 2012-13.

The market seems to be pacing up for another massive rally as the Nifty hits 7300. The Nifty is at 7300.70, up 47.80 points. The Sensex is up 183.35 points at 24481.37.

About 1943 shares have advanced, 461 shares declined, and 71 shares are unchanged.

Coal India is still up 7 percent while Maruti Suzuki, Sesa Sterlite, NTPC and Bajaj Auto are top gainers in the Sensex. Among the losers are Bharti Airtel, Infosys, HDFC Bank, Wipro and Hindalco.

Rupee is trading higher on dollar's broad weakness against Asian currencies. Gilts are slightly higher as market sentiment improved post rise on Wednesday. The euro is trading lower against the dollar and the yen is in a tight range.

Crude futures spiked with Nymex ending at the highest level in a month. Gold is still trading in a narrow range

Asian markets trade mostly higher following the positive us close. The HSBC flash manfuacturing PMI for China also showed a marginal uptick to 49.7 in May versus 48.1 in April.

"Given the potential of superior volume and earnings growth over the FY15-18 period in a recovery phase, we believe that Maruti deserves a higher PE multiple on FY16 earnings and raise TP to Rs 2700/sh at 17x FY16 P/E. We believe that minority shareholders are likely to vote down the Gujarat plant deal by mid-FY15, which will remove another overhang from the stock. Reiterate buy," says CLSA in report.

10:40am Coal India surges 7%Reports indicate that Narendra Modi government is exploring the possibility of converting various units of Coal India into independent companies and making respective state governments equity holders. Report also says it may also open up the sector to foreign investment to boost output.

10:30am FII ViewJyotivardhan Jaipuria, Bank of America Merrill Lynch says FII holding in Sensex companies is currently at all-time high. ''In the wider BSE 200 Index, FII stake is also at an all-time high at 24.5 percent,'' he adds.

He further says, as always, financials remain the most overweight sector for FIIs accounting for 28.5 percent of the FII portfolio. ''Overweight of the sector further got increased coupled with reduction in MSCI weight for HDFC Bank,'' he adds.

The central bank has marginally eased the import squeeze on gold. Rules have been eased for trading houses to import gold under the 20:80 scheme. Under the much criticised 20:80 scheme, an importer had to ensure that at least one-fifth, or 20 percent, of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use.

After relaxation of gold norms, availability of duty paid gold in India will increase and hence according JP Morgan, gold imports will rise from 30-40 tons to 40-50 tons per month.

Two-wheeler maker Bajaj Auto gained another 3 percent, in addition to 5 percent gains in previous session after sources told CNBC-TV18 that the company has received big order from Egypt.

9:50 am Buzzing: Shares of Bajaj Auto jumped over 3 percent intraday as Egypt government has lifted its two and three-wheeler import ban.

Earlier on February 12, the Egypt Cabinet had authorised its ministry of finance to go-ahead with the ban, a move primarily designed to give a leg-up to its fledgling automobile industry. Egypt constitutes a vital export market for Bajaj Auto, since it contributed 31 percent of the total three-wheeler exports and around 5 percent of the two-wheeler exports in 2012-13.

Bajaj Auto is likely to get fresh orders for its products from Egypt. The auto major is likely to export around 5,500 three-wheelers and around 3,500 motorcycles next month.

9:40 am Chinese PMI: China's factory sector turned in its best performance in five months in May, a preliminary HSBC survey showed on Thursday, though overall manufacturing growth still contracted slightly in a suggestion that the outlook remains murky. The HSBC Flash China Manufacturing Purchasing Managers' Index (PMI) recovered to 49.7 in May from April's final reading of 48.1, beating a Reuters' poll forecast of 48.1.

9:30 am FII view: Jyotivardhan Jaipuria, Bank of America Merrill Lynch says FII holding in Sensex companies is currently at all-time high. ''In the wider BSE 200 Index, FII stake is also at an all-time high at 24.5 percent,'' he adds.

He further says, as always, financials remain the most overweight sector for FIIs accounting for 28.5 percent of the FII portfolio. ''Overweight of the sector further got increased coupled with reduction in MSCI weight for HDFC Bank,'' explains.

Meanwhile, Salil Aggarwal, Deutsche Bank says recent emerging market (EM) rally driven by covering of short and underweight exposure but the longer term performance downtrend is still intact.

The market has opened at a slightly higher level. The Sensex is up 114.17 points at 24412.19, and the Nifty is up 37.05 points at 7289.95. About 645 shares have advanced, 65 shares declined, and 14 shares are unchanged.

Gold jewellery stocks are in focus as the central bank has marginally eased the import squeeze on gold. Rules have been eased for trading houses to import gold under the 20:80 scheme.

Bajaj Auto, Coal India, Maruti Suzuki, Hindalco and Tata Power are top gainers in the Sensex. Among the losers are Bharti Airtel, Hero MotoCorp, HDFC Bank and Tata Motors.

The rupee has opened higher at 58.60 per dollar on Thursday, up 17 paise compared to previous day's closing value of 58.77 a dollar.

Mohan Shenoi, Kotak Mahindra Bank says USD-INR has settled into a tight range. The market now awaits government formation, budget, etc. for further moves, he adds.He expects the rupee to trade in a range of 58.60-58.90/USD today.

Global cues, meanwhile, may lend in support for the market rally with all the major markets closing with significant gains.US stocks jumped high, bouncing back from the prior day's sharp fall, after minutes from the Federal Reserve's last meeting had central bankers discussing ways to normalize interest rates.

Asian equity markets are following suit with the Nikkei trading higher as the yen bounced off a three-and-a-half month high of 100.8.